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'Cheapest ever' mortgages now mean you can buy a home - and pay interest at less than 1pc

Mortgage rates have fallen below 1pc for the first time ever as lenders are attempting to keep people buying homes, despite fears a vote for a Brexit will send house prices tumbling.

Today HSBC has launched the lowest two-year fixed rate mortgage in history at 0.99pc, which is only available for borrowers with at least a 35pc deposit.

By switching from the next cheapest deal, offered by the Post Office at 1.14pc, someone with a £150,000 20-year mortgage could save £10 a month, according to calculations by London and Country, a mortgage broker.

It comes as developers and agents are getting increasingly desperate to sell homes as the market has significantly slowed over fears that a vote to leave the EU could have a negative effect on house prices - and make lending more expensive.

Last month George Osborne warned house prices could take an 18pc hit over the next two years if the UK votes to leave, causing many potential buyers to hold off until after June 23rd.

Mortgage rates have tumbled steadily since hitting a ten-year high in June 2008 as the financial crisis began, largely as a result of ultra-low inter-bank lending rates allowing them to pass savings onto customers.

In February Chris Pilling, chief executive of Yorkshire Building Society, predicted mortgage rates would plunge below 1pc for the first time, making the cost of paying for a home cheaper than ever.

David Hollingworth, a property expert at London and Country Mortgages, said: "This is a cracker of a deal which is designed to grab nervous borrowers' attention and remind them that the cost of lending is at all-time lows.

Competition between lenders is high so it's likely that others will try to follow suit, but the difference between this and the next best deal is quite chunky."

Tracie Pearce, head of mortgages at HSBC, said: For customers purchasing a new home, coming to an end of a fixed rate deal or already on a Standard Variable Rate, this is an ideal opportunity to take advantage of a great value product with the security of knowing that payments will not increase over the next two years.

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Puts more pressure on saving rates. Tbh I am fairly relaxed so long as retail inflation remains screwd to the floor...1.4% or 0.3% on the CPI measure. My savings earn pretty much diddly squat now even though in better days they would have provided a living wage. But you can't take the money with you and a bit of drawdown will hardly impact on the overall pot.

Meanwhile those that get into debt won't have the luxury of inflation to erode the debt. If this last decade is anything to go buy they are entering into a life sentence.

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Puts more pressure on saving rates. Tbh I am fairly relaxed so long as retail inflation remains screwd to the floor...1.4% or 0.3% on the CPI measure. My savings earn pretty much diddly squat now even though in better days they would have provided a living wage. But you can't take the money with you and a bit of drawdown will hardly impact on the overall pot.

Meanwhile those that get into debt won't have the luxury of inflation to erode the debt. If this last decade is anything to go buy they are entering into a life sentence.

Tell me about it, I'm only averaging 2% now . I had thought that my main source of income in retirement would be the interest on my savings but now it's pensions. Good job I hedged my bets and made reasonably adequate pension provision.

This government (and NuLabour) have a lot to answer for. Fortunately, we have the chance to give them a kicking later this week.

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In years long since gone by you had a mortgage for the whole term eg 25 years. Now although rates may be low you have to remortgage every few years and pay additional fees for the privilege. We really are suckers....no-one seems to think about this aspect.

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In years long since gone by you had a mortgage for the whole term eg 25 years. Now although rates may be low you have to remortgage every few years and pay additional fees for the privilege. We really are suckers....no-one seems to think about this aspect.

People don't consider the fees and if you keep adding them to you mortgage each time, you could end up paying 10's of thousands more in interest.

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In years long since gone by you had a mortgage for the whole term eg 25 years. Now although rates may be low you have to remortgage every few years and pay additional fees for the privilege. We really are suckers....no-one seems to think about this aspect.

Quite. Anyone with a smallish mortgage is a mug to pay these fees most of the time on such a short term. Deals without fees are around ~.8% more.

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even though its not logical to take this mortgage over a higher rate. I do like to pay bills upfront long in advance when i can.

First mortgage, already have a big deposit, pay a bit more for cheaper outgoings for the first two years in a higher upfront cost. I can personally see the appeal.

Front load the pain as much as humanly possible.

Its obviously a balancing act. If you want to front load as much as possible, you'd need to work out if you are best doing this with a lower rate and fee or higher rate and over payment.

I happen to be keen on this at the moment as my 5yr fix comes to an end in October (but if I stick with NW I can switch 3 months early) and I'm needing to run all the maths of fixes/trackers/fees etc as well as consider get out fees should we finally get a HPC and I can trade up... My existing 5yr fix at 3.79% is looking high compared to whats on the market at present even with £0 fees (probably what I'll go for due to low outstanding balance, fees of 5% of the outstanding suddenly make a low rate fix very expensive).

Quick glance says no fee 5yr tracker at the moment, fee free get out and even if base rates shoot up I'll cope.